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LAW ON AMENDMENTS AND SUPPLEMENTS TO A NUMBER OF ARTICLES OF THE LAW ON TURNOVER TAX

LAW ON AMENDMENTS AND SUPPLEMENTS TO A NUMBER OF ARTICLES OF THE LAW ON TURNOVER TAX

Pursuant to Article 80 and Article 84 of the 1992 Constitution of the Socialist Republic of Vietnam;

This Law provides for amendments and supplements to a number of articles of the Law on Turnover Tax passed on June 30, 1990 by the VIIIth National Assembly at its 7th Session, and the Law on Amendments and Supplements to a Number of Articles of the Law on Turnover Tax passed on July 5, 1993 by the IXth National Assembly of the Socialist Republic of Vietnam at its 3rd Session.

Article 1. - To amend and supplement a number of articles of the Law on Turnover Tax as follows:

1- Article 2 is amended and supplemented into the following:

"Article 2.-

The following activities are not subject to turnover tax:

1. Agricultural production which is subject to agricultural land use tax;

2. Production of commodities which are subject to special consumption tax;

3. Production of goods for export;

4. Credit activities."

2- Article 8 is amended and supplemented into the following:

"Article 8.-

1- Taxable turnover is the total revenue earned from business activities conducted in Vietnam, irrespective of branch, occupation, form of business, location of the business establishment whether inside or outside Vietnam.

Taxable turnover of a number of business activities is stipulated as follows:

a) The turnover from production activities is the money earned from the sale of goods;

b) The turnover from subcontracting is subcontracting costs including wages, costs of fuel, equipment, materials and auxiliaries, and other expenditures;

c) The turnover from the construction activities is the revenue earned from construction;

With regard to the installation of machinery and whole sets of equipment connected with construction, the taxable turnover thereof does not include the value of machinery and equipment;

d) The turnover from transportation activities is the fees paid for the transportation of goods, passengers and luggage;

e) The turnover from restaurants is the revenue earned from the catering business;

f) The turnover from trade activities is the revenue earned from the sale of goods or from the difference between the sale price and the purchase price;

g) The turnover of a sale agent, or purchase and sale trustee, is the commission earned;

h) The turnover from the service activities is the charges and fees paid for these services;

i) The turnover from insurance activities is the revenue earned from the insurance business.

2. Business establishments having their turnover in foreign currency may pay tax in foreign currency or in Vietnamese Dong, converted at the buying rate announced by the State Bank of Vietnam at the moment of tax payment.

3. In case of barter of goods or services, or self-supply of goods and services, those goods and services shall be, for the purpose of tax calculation, valued at the market prices at the time of the barter or the self-supply.

Article 2.- To amend and supplement the turnover tax rates with regard to a number of business lines in the Turnover Tax Table currently in force and promulgate together with this Law the amended and supplemented Turnover Tax Index.

Article 3.- This Law takes effect from January 1st, 1996.

Article 4.- The Government shall amend and supplement the documents providing in details for the implementation of the Law on Turnover Tax so as to make them comply with this Law.

(This Law was passed on October 28, 1995 by the IXth National Assembly of the Socialist Republic of Vietnam at its 8th Session.)

Chairman of the National Assembly

NONG DUC MANH

TURNOVER TAX INDEX (AMENDED AND SUPPLEMENTED)

(promulgated together with the Law on Amendments and Supplements to a Number of Articles of the Law on Turnover Tax passed on October 28, 1995 by the IXth National Assembly at its 8th Session)

PRIVATE

Ordinals

Type of businessTax Rate (%)123

1

2

3

4

5

6

7

8

9

10

11

12

13

141. PRODUCTION BRANCH

Commercial electricity

Exploitation of natural and mineral resources:

a) Oil, gas, gold, precious stones

b)Forestry products

c) Aquaproducts, other natural and mineral resources

Except: coal extracted from pits

Production of safe water in service of production and daily life

Metal refining, rolling and threading and coking

Except: Refinery, rolling, threading of non-ferrous and precious metals (gold, silver)

Production and assembly of mechanical products

Except: - Machinery, equipment, and means of transport

- Electric fans, irons, transformers and stabilizers of under 15A, electric pumps of less than 10m3/hour, washing machines, air conditioners, refrigerators, vacuum cleaners, dehumidifiers, geysers, utensils with electric devices (electric cookers, electric kettles, electric sauce pans, food mixers, etc), gas stoves, electric stoves, manufacture and assembly of automobiles with 24 seats or less

Production and assembly of electronic products

Except: Specialized electronic machinery and equipment, computers

Chemical products

Except: - Basic chemicals, fertilizers

- Pesticides and insecticides and other chemicals for agricultural production

- Luboils and greases

Construction materials, including clinker, concrete mortar, pre-fab concrete

Except cement: - From P300 upwards

- Under P300

Pottery, porcelain, ceramics, glass:

Except: medical glass

Processing of forestry products and woodwork

Paper and paper products

Except:wood pulp, newsprint and school writing paper

Food milling, husking and processing

Except: Instant noodles

Foodstuffs production and processing (including tobacco leaves, shredded tobacco, tobacco for waterpipes, alcohol, coffee, glutamate, sugar, confectionery...)

Except: - Salt

- Ice for storing aquaproducts

- Soup seasonings, sauce of various kinds, vegetable oils, tea, milk of various kinds

- Soft drinks, refreshments

Aquaproduct processing

8

8

4

2

1

1

2

4

2

1

4

8

4

4

1

0.5

2

4

10

6

4

1

6

2

1

2

6

6

0.5

2

4

8

4

PRIVATE 12315

16

17

18

19

20

21

22

23

24

25

26

27

28

29

1

Fibre, textiles, cotton:

a) Assorted fibre (including wool yarn for carpet weaving, and yarn from jute, silk, rush), thread

Except: woolen yarn, synthetic fibre

b) Assorted textiles

Except: weaving jute, rush items, mats, blinds and hand-woven or semi-mechanical products

c) Primary processing of home-grown cotton,

Cloth, canvass shoes, production of leather materials, leatherette

Leather and leatherette products

Printing and publication (excluding advertizing):

a) Books, films (including film developing and processing), recorded audio tapes, video tapes, laser discs

b) Assorted newspapers

c) Political books, textbooks, scientific and technical books, children's books, books and newspapers in the languages of ethnic minorities, people's newspapers, people's army's newspapers, State leaders' portraits and paintings, posters, propaganda pictures and paintings, banknote printing, documentary films, reportage films, films with revolutionary, children's and scientific themes

d) Production of blank audio tapes and video tapes

e) Printing and publication of other products, other activities in the printing and publishing industry

Lab instruments, medical instruments, children's toys, educational aids

Sports and gymnastic equipment, musical instruments and spare parts

Curative medicines, anti-epidemic medicines, medical cotton and bandages

Production of fine arts products

Production of cosmetics

Production of playing cards, votive paper, incense sticks and candles

a) Playing cards, votive paper

b) Incense sticks and candles

Production and processing of domestic animals' feed

Agricultural production not subject to agricultural land use tax

Except: manufacture of seedlings, and animal breeds

Manufacture of production tools

Subcontracting, irrespective of products and business lines (tax calculation to be based on subcontracting expenditures)

Other production and processing

II. CONSTRUCTION INDUSTRY

Construction and installation, survey, design, and other activities in construction

2

4

4

2

1

4

6

1

0.5

0

2

4

0.5

1

1

8

10

20

8

2

2

1

1

6

4

4

PRIVATE 123

1

2

1

2

3

4

5

6

7

1

III. TRANSPORTATION SERVICE

Transportation of goods

Except: Transportation by rudimentary means in mountainous areas and islands

Transportation of passengers, luggage, air transportation (including passengers, luggage and goods)

Except: transportation of passengers in cities and urban areas by bus

IV. TRADE SERVICE

Trading in commodities (including petrol, motor vehicles, automobiles with 24 seats or less)

Except: Food, fresh foodstuffs, fresh fruits and vegetables, salt, medicines, lab instruments, medical instrument, fertilizers, pesticides, insecticides, machinery, equipment (including computers, fax machines, photocopiers), means of transport, spare parts, raw materials, materials, fuel, books and newspapers, educational aids, children's toys, seedlings, plant and animal breeds, film distribution

Export service

Trading in gold, silver and gems

Trading in foreign currencies

Trading in real estate (including building houses for sale)

Sale by agents, sale on consignment, and trusted sale and purchase of goods (tax calculation to be based on the commission earned)

Business establishments (except those trading in lots) having books of account, keeping records in accordance with the regulations recognized by the tax office shall have their turnover tax calculated on the basis of the difference between the sale price and the purchase price

Except: - Trading in gold, silver, gems, foreign currencies, real estate

- Distribution of books, newspapers, films

- Trading in salt

- Trading in farm products, fresh foodstuffs, fresh fruits and vegetables

V. RESTAURANTS

Restaurant business

Except: luxury, specialty restaurants

4

0.5

4

1

2

1

1

1

0.4

4

15

15

20

4

4

10

6

10

PRIVATE 123

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

VI. SERVICES

Repair services of various businesses and occupations

Except: - Repairs of machinery, equipment, means of transport

- Repairs of electrical, electronic and cold-storage appliances

Scientific and technical services

Legal consultancy service

Post and telecommunications services

Health, sports, gymnastic, cultural and art, vocational training services

Except: Art performance (circus, tuong (classical opera), cheo (traditional opera), cai luong (reformed drama), drama, puppet shows, singing, dancing, musical instruments playing...), film projection

Other services and activities (except credit activities) of banks, credit organizations and financial companies

Insurance

Except: - Insurance for school pupils

- Insurance for domestic animals, plants

Pawn brokerage

Loading and unloading of goods, leasing of warehouses, store yards, workshops, machinery, equipment, means of transport

Leasing of houses, shops, furniture, wedding halls, conference rooms, tourist cars

Trading in hotels, bed rooms, tourist services, sightseeing tours

Except: lodging business

Photograph taking, printing and enlargement, photocopying, video shooting and video screening

Tape recording, dubbing and hiring

Hairdressing, tailoring, dyeing, laundry, steam bleaching

Other services

Except: sanitory services, street drainage, funeral services

Special services:

a) Beauty parlor

b) Dancing

c) Karaoke, sauna, massage

d) Horse racing

e) Golf business

f) Lotteries for public construction and other forms of lottery

Except: lotteries for public construction in mountainous provinces, scratch and loto lotteries

g) Shipping agents

h) Brokerage

i) Advertizing

4

2

6

2

4

6

0.5

0

6

4

0

0

4

4

10

10

6

6

8

6

4

0

10

30

20

20

20

30

20

30

15

15